4

Views

Alaskan LNG Pipeline and Proposed LNG Terminals Both Feasible

According to the Federal Energy Regulatory Commission (FERC), future demand for natural gas in the United States will be strong enough support both a planned pipeline to bring Alaskan gas to the lower 48 states and some of the many liquefied natural gas import terminals that have been proposed. Over 40 LNG projects are in various stages of proposal and approval in North America.

Recent FERC and MARAD approvals of several projects have given hope that more than a few of the terminals will eventually be built here in the United States. A group of large energy companies is also in the process of hammering out the details for building a natural gas pipeline in Alaska to bring stranded gas in Alaska to the lower 48. Privately, some observers speculate that only a handful of the proposed LNG terminal projects will ever be built. The pipeline itself faces contractual hurdles which have not yet been settled.

The Alaskan pipeline is expected to cost upwards of $20 billion and will take at least ten years to build. In the meantime, LNG imports are expected to triple over the coming decade. Hence, the pipeline will be needed to absorb some of that demand. First, however, the pipeline's operators; oil majors Exxon Mobil, BP and ConocoPhillips, are trying to get assurances that tax rates will remain predictable for the foreseeable future in an effort to at least mitigate some of the financial risks involved in a project this large.